LONDON/JOHANNESBURG, Nov 6 (Reuters) - Mozambique has reached an agreement with the bulk of its creditors to restructure a $726.5 million Eurobond, including extending maturities and sharing future revenues from huge offshore gas projects, the finance ministry said on Tuesday.

Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4 billion of previously undisclosed lending, much of which was supposed to be spent on a tuna fishing fleet.

The disclosure prompted the International Monetary Fund and foreign donors to cut off support to the southern African state, triggering a currency collapse and a default on sovereign debt.

Under the deal, Mozambique would issue a new $900 million Eurobond maturing in 2033 with a coupon of 5.875 percent - just over half what the current outstanding bond was designed to pay in interest.

Principal repayments of the bond, roughly equating to the outstanding sum plus just over $180 million in unpaid interest, would begin in 2029.

Through a separate instrument, creditors would also receive 5 percent of future fiscal revenues from the Area 1 and Area 4 natural gas projects, though payments would be capped at $500 million.

A bondholder close to the situation said the plan would provide Mozambique with cash flow relief of around 85 percent.

"It is a good deal, there are no winners or losers here. All the parties wanted to define a package that is fit for the reality in Mozambique, finding a robust structure with low probability of default in the future and that will mirror the cash flows," the investor told Reuters.

Eurobond holders had pushed for an instrument linked to the expected gas windfall, a demand Maputo had previously rejected.

Investors welcomed the change in stance but some said it was not without risks.

"If we get lower oil prices, higher construction costs or long delays, there is a risk of significantly lower recovery than $500 million," the bondholder said.

The existing bond rallied sharply following the proposal, rising more than 9 cents to above 92 cents.

The ministry's statement made no mention of a $535 million loan to Mozambique Asset Management (MAM) and a $622 million facility for maritime security projects at Proindicus arranged by Russian lender VTB and Credit Suisse.

Mozambique was charged almost $200 million in arrangement and contractor fees by VTB and Credit Suisse, according to an independent audit of loans totalling $2 billion.

Credit Suisse has said the contractor fees were effectively passed on to syndicate loan members or bondholders.

NOT THERE

Yet the deal is not quite over the finishing line.

Support from creditors holding 75 percent of the bond will be needed to activate the collective action clauses.

Mozambique said the four creditors who had agreed in principle to the restructuring - Farallon Capital Europe LLP, Greylock Capital Management, LLC, Mangart Capital Advisors SA and Pharo Management LLC - controlled around 60 percent of the 2023 bond.

Apart from these four, the steering committee of the Global Group of Mozambique Bondholders (GGMB) that has headed the talks includes asset manager Franklin Templeton Investment Management Limited.

"There is still some room to go to get everybody, but I think they must feel confident they can find that by making that statement," said Stuart Culverhouse, head of sovereign & fixed income research at Exotix.

Franklin Templeton did not respond to a request for comment.

"The deal would only make a relatively small dent in Mozambique's overall fiscal problem," wrote William Jackson, chief emerging markets economist at Capital Economics in a note.

"Mozambique's public debt ratio, at around 120 percent of GDP, will remain the highest in sub-Saharan Africa." (Reporting by Karin Strohecker in London and Alexander Winning in Johannesburg, Editing by Joe Brock and Ed Osmond)